South African building materials retailer Cashbuild has agreed to buy The Building Company Proprietary Ltd (TBC) from owner Pepkor Holdings for R1.07 billion ($62.44 million), it said on Tuesday.
The deal will boost Cashbuild’s retail presence in previously underrepresented regions such as the Western Cape, Eastern Cape and Kwa-Zulu Natal provinces, it said, and give it greater exposure to the mid-to-higher income customer segment.
Clothing and furniture retailer Pepkor, which is majority owned by Steinhoff, said in a separate statement it will use the proceeds to further reduce debt, which stood at R14.1 billion on March 30.
Pepkor said the disposal of TBC, which contributed 10% of the group’s first-half revenue, will enable it to focus on its core discount and value retail businesses.
The deal also includes buying Pepkor’s shareholder loan claims against TBC.
TBC, a building materials retail and wholesale business, has 160 outlets and 21 franchise stores across the coastal regions of South Africa and Zambia, Botswana and Namibia.
In a separate statement Cashbuild said revenue for the fourth quarter to end June slid 23% year-on-year, while revenue for the year ended June fell 7% due to lockdown restrictions that prevented the building materials retailer from selling.
Headline earnings per share, the main profit measure in South Africa, for the year is seen falling by more than 20% from 1,751 cents a year earlier.